[not yet scheduled for oral argument]...commerce, the scottsdale chamber of commerce, the...
TRANSCRIPT
[NOT YET SCHEDULED FOR ORAL ARGUMENT]
No. 19-5125
IN THE UNITED STATES COURT OF APPEALS
FOR THE DISTRICT OF COLUMBIA CIRCUIT
STATE OF NEW YORK, et al.,
Plaintiffs-Appellees,
v.
UNITED STATES DEPARTMENT OF LABOR, et al.,
Defendants-Appellants.
CORRECTED BRIEF OF THE CHAMBER OF COMMERCE OF THE
UNITED STATES OF AMERICA, STATE AND LOCAL CHAMBERS OF
COMMERCE, THE NATIONAL FEDERATION OF INDEPENDENT
BUSINESS, THE TEXAS ASSOCIATION OF BUSINESS, AND THE
UNITED SERVICE ASSOCIATION FOR HEALTH CARE AS AMICI
CURIAE IN SUPPORT OF APPELLANTS
Daryl Joseffer
Janet Galeria
U.S. CHAMBER LITIGATION
CENTER
1615 H Street, NW
Washington, D.C. 20062
(202) 463-5337
Counsel for Chamber of Commerce of
the United States of America
Michael H. McGinley
DECHERT LLP
1900 K Street, NW
Washington, D.C. 20006
(202) 261-3300
David H. Stern
DECHERT LLP
US Bank Tower
633 West 5th Street, Suite 4900
Los Angeles, CA 90071
(213) 808-5720
Counsel for Amici Curiae
USCA Case #19-5125 Document #1793456 Filed: 06/18/2019 Page 1 of 51
TABLE OF CONTENTS
Page
-i-
INTRODUCTION AND SUMMARY OF ARGUMENT ....................................... 1
ARGUMENT ............................................................................................................ 3
I. The Final Rule Aims to Solve Problems Working Owners and Small
Businesses Have Long Experienced When Attempting to Secure
Affordable Coverage. ..................................................................................... 3
II. The Final Rule Provides a Common Sense, Highly Effective Solution
that Improves Competition While Benefiting Millions of Small-
Business Employees and Working Owners. ................................................... 7
A. The Final Rule Provides a Common Sense Solution to the
Problems Faced by Small Businesses and Working Owners. .............. 7
B. The Final Rule Makes Working Owners and Small Businesses
More Competitive by Enabling Them to Secure Affordable,
Quality Health Coverage. ................................................................... 14
III. The Department’s Final Rule Builds on ERISA and the ACA to Offer
More Americans Quality, Affordable Health Coverage. ............................. 17
CONCLUSION ....................................................................................................... 20
USCA Case #19-5125 Document #1793456 Filed: 06/18/2019 Page 2 of 51
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TABLE OF AUTHORITIES
Page(s)
Cases
Air Transport Ass’n of Am. v. Nat. Mediation Bd.,
663 F.3d 476 (D.C. Cir. 2011) ............................................................................ 18
F.C.C. v. Fox Television Stations, Inc.,
556 U.S. 502 (2009) ............................................................................................ 18
King v. Burwell,
135 S. Ct. 2480 (2015) .......................................................................................... 4
Nat’l Fed’n of Indep. Bus. v. Sebelius,
567 U.S. 519 (2012) ............................................................................................ 20
Statutes
42 U.S.C. § 300gg-3................................................................................................. 19
42 U.S.C. § 300gg-11............................................................................................... 19
42 U.S.C. § 300gg-12............................................................................................... 19
42 U.S.C. § 300gg-13............................................................................................... 19
42 U.S.C. § 300gg-14............................................................................................... 19
Patient Protection and Affordable Care Act, Pub. L. No. 111-148
(2010) ............................................................................................. 1, 3-5, 9, 17-20
Administrative Procedure Act, Pub. L. No. 79-104 (1946) ............................... 17-18
Employee Retirement Income Security Act, Pub. L. No. 93-406
(1974) .............................................................................................................. 2, 17
Other Authorities
83 Fed. Reg. at 28,912 (June 21, 2018) ..................................................... 5, 7, 12-20
Amy B. Monahan & Daniel Schwarcz, Saving Small-Employer Health
Insurance, 98 Iowa L. Rev. 1935, 1942-43 (July 2013) ....................................... 6
USCA Case #19-5125 Document #1793456 Filed: 06/18/2019 Page 3 of 51
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Ashley Stahl, Forbes, “Employers, Take Note: Here’s What
Employees Really Want” (Oct. 16, 2016), https://bit.ly/2SHvoE9 .............. 16-17
Chamber of Commerce of the United States of America Comment
Letter (Mar. 6, 2018), https://bit.ly/2JKuxhM .................................................... 12
Jennifer Tolbert, Henry J. Kaiser Family Foundation, “The Coverage
Provisions in the Affordable Care Act: An Update” (Mar. 2, 2015),
https://bit.ly/2Pbs3yR ....................................................................................... 4-5
John G. Day, The Patient Protection and Affordable Care Act: What
Does It Really Do?, 22 Conn. Ins. L.J. 121, 134-35 (2016) ................................. 4
National Federation of Independent Business Comment Letter (Jan.
23, 2018), https://bit.ly/2D50rEw ....................................................................... 12
Paul Fronstin, Employee Benefit Research Institute, Fewer Small
Employers Offering Health Coverage: Large Employers Holding
Steady (July 2016), https://bit.ly/2KhiCub ........................................................... 5
Paul Fronstin, Employee Benefit Research Institute, Workers Rank
Health Care as the Most Critical Issue in the United States (Sept.
24, 2018), https://bit.ly/2Wrk18P ................................................................. 15, 16
Reed Abelson, “While Premiums Soar under Obamacare, Cost of
Employer-Based Plans Are Stable” (Sept. 19, 2017),
https://nyti.ms/2fyyo3O ........................................................................................ 5
Society for Human Resource Management Comment Letter (Mar. 6,
2018), https://bit.ly/2yUFNnJ ............................................................................. 15
Thomas J. Donohue, AHPs Are Key to Valuable Health Coverage
(Apr. 29, 2019 ), https://uscham.com/2K0hU5n ................................................ 14
United States Congressional Budget Office, “Federal Subsidies for
Health Insurance Coverage for People under Age 65: 2018 to
2028” (May 2018), https://bit.ly/2IIPtEL ........................................................... 14
U.S. Chamber of Commerce, “Successful Association Health Plans”
(last visited June 7, 2019), https://uscham.com/2XAXlj4 ......... 2, 6-13, 15, 19-20
USCA Case #19-5125 Document #1793456 Filed: 06/18/2019 Page 4 of 51
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GLOSSARY
ACA Patient Protection and Affordable Care Act
APA Administrative Procedure Act
ERISA Employee Retirement Income Security Act
NFIB National Federation of Independent Business
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CERTIFICATE AS TO PARTIES, RULINGS, AND RELATED CASES
Pursuant to D.C. Circuit Rule 28(a)(1), the undersigned counsel certifies as
follows:
A. Parties and Amici
Plaintiffs/Appellees are the State of New York, the Commonwealth of
Massachusetts, the District of Columbia, the State of California, the State of
Delaware, the Commonwealth of Kentucky, the State of Maryland, the State of New
Jersey, the State of Oregon, the Commonwealth of Pennsylvania, the
Commonwealth of Virginia, and the State of Washington.
Defendants/Appellants are the U.S. Department of Labor, R. Alexander
Acosta, in his official capacity as Secretary of the U.S. Department of Labor, and
the United States of America.
Amici before the district court included: the Chamber of Commerce of the
United States of America and the Society for Human Resource Management, the
States of Texas, Nebraska, Georgia, and Louisiana; Nancy Pelosi, Steny H. Hoyer,
James E. Clyburn, Joseph Crowley, Linda T. Sánchez, Robert C. Scott, Frank
Pallone, Jr., Jerrold Nadler, and Richard E. Neal, the Restaurant Law Center, the
American Medical Association and the Medical Society of the State of New York,
and the Coalition to Protect and Promote Association Health Plans.
Amici before this Court include: the Chamber of Commerce of the United
USCA Case #19-5125 Document #1793456 Filed: 06/18/2019 Page 6 of 51
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States of America, the National Federation of Independent Business, the Texas
Association of Business, the United Service Association for Health Care, the Alaska
Chamber of Commerce, the Louisiana Association of Business and Industry, the
Minnesota Chamber of Commerce, the State Chamber of Oklahoma, the Vermont
of Chamber of Commerce, the Tennessee Chamber of Commerce & Industry,
Wisconsin Manufacturers & Commerce, the Greater Fairbanks Chamber of
Commerce (Alaska), the East Valley Chambers of Commerce Alliance (Arizona),1
the Tucson Metro Chamber (Arizona), the Greater Miami Chamber of Commerce
(Florida), the Bolingbrook Area Chamber of Commerce (Illinois), the Carol Stream
Chamber of Commerce (Illinois), Chamber630 (Illinois), the Elgin Area Chamber
of Commerce (Illinois), the Elmhurst Chamber of Commerce & Industry (Illinois),
the Heritage Corridor Business Alliance (Illinois), the Orland Chamber of
Commerce (Illinois), the St. Charles Chamber of Commerce (Illinois), the West
Suburban Chamber of Commerce and Industry (Illinois), the Wheaton Chamber of
Commerce (Illinois), the Traverse City Area Chamber of Commerce (Michigan), the
Northwest Chamber of Commerce (Missouri), the Boulder City Chamber of
Commerce (Nevada), the Henderson Chamber of Commerce (Nevada), the Las
1 The East Valley Chambers of Commerce Alliance represents seven chambers in
Arizona: the Carefree Cave Creek Chamber of Commerce, the Gilbert Chamber of
Commerce, the Mesa Chamber of Commerce, the Queen Creek Chamber of
Commerce, the Scottsdale Chamber of Commerce, the Superstition Region Chamber
of Commerce, and the Tempe Chamber of Commerce.
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Vegas Asian Chamber of Commerce (Nevada), the Las Vegas Latin Chamber of
Commerce (Nevada), the Las Vegas Metro Chamber of Commerce (Nevada), the
Reno + Sparks Chamber of Commerce (Nevada), the Urban Chamber of Commerce
(Nevada), the Zebulan Chamber of Commerce (North Carolina), the Chester County
Chamber of Business and Industry (Pennsylvania), the Greater Lexington Chamber
of Commerce and Visitor Center (South Carolina), the Allen Fairview Chamber of
Commerce (Texas), the Cedar Hill Chamber of Commerce (Texas), the Chamber
(Schertz-Cibolo-Selma Area) (Texas), the Colleyville Chamber of Commerce
(Texas), the Denison Area Chamber of Commerce (Texas), the East Parker County
Chamber of Commerce (Texas), the Frisco Chamber of Commerce (Texas), the
Garland Chamber of Commerce (Texas), the Granbury Chamber of Commerce
(Texas), the Grand Prairie Chamber of Commerce (Texas), the Grapevine Chamber
of Commerce (Texas), the Greater Arlington Chamber of Commerce (Texas), the
Greater Waco Chamber of Commerce (Texas), the Hurst Euless Bedford Chamber
of Commerce (Texas), the Lake Cities Chamber of Commerce (Texas), the
Lewisville Area Chamber of Commerce (Texas), the Longview Chamber of
Commerce (Texas), the Lubbock Chamber of Commerce (Texas), the Melissa Area
Chamber of Commerce (Texas), the Mansfield Area Chamber of Commerce
(Texas), the Mesquite Chamber of Commerce (Texas), the North Texas Gay Lesbian
Bisexual Transgender Chamber of Commerce (Texas), the Plano Chamber of
USCA Case #19-5125 Document #1793456 Filed: 06/18/2019 Page 8 of 51
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Commerce (Texas), the Pottsboro Area Chamber of Commerce (Texas), the San
Antonio Chamber of Commerce (Texas), the Rockwall Area Chamber of Commerce
(Texas), the Rowlett Chamber of Commerce (Texas), the Wichita Falls Chamber of
Commerce (Texas), the Wylie Chamber of Commerce (Texas), the Marshfield Area
Chamber of Commerce & Industry (Wisconsin), the Oklahoma Insurance
Department, the Montana State Auditor, Commissioner of Securities and Insurance,
the National Association of Realtors, the Baldwin County Association of
REALTORS, the Greater Las Vegas Association of REALTORS, Tennessee
REALTORS, Kansas City Regional Association of REALTORS, Restaurant Law
Center, Nevada Association of REALTORS, the Coalition to Protect and Promote
Association Health Plans, AssociationHealthPlans.com, the State of Texas, the State
of Alabama, the State of Georgia, the State of Indiana, the State of Kansas, the State
of Louisiana, the State of Montana, the State of North Dakota, the State of
Oklahoma, the State of South Carolina, the State of South Dakota, the State of
Tennessee, the State of Utah, the State of West Virginia, Phil Bryant, in his official
capacity as the Governor of Mississippi, and the State of Kentucky, by and through
Governor Matt Bevin.
B. Rulings Under Review
Appellants and amici seek review of the District Court’s Order and
Memorandum Opinion entered on March 28, 2019 (Dkt. Nos. 78, 79). The rulings
USCA Case #19-5125 Document #1793456 Filed: 06/18/2019 Page 9 of 51
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were issued by the Honorable John D. Bates in Case No. 1:18-cv-1747.
C. Related Cases
This case has not previously been before this Court. Counsel is not aware of
any other related cases within the meaning of D.C. Circuit Rule 28(a)(1)(C).
Dated: June 18, 2019
By: /s/ Michael H. McGinley
Michael H. McGinley
DECHERT LLP
1900 K Street, NW
Washington, D.C. 20006
(202) 261-3300
Counsel for Amici Curiae
USCA Case #19-5125 Document #1793456 Filed: 06/18/2019 Page 10 of 51
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CORPORATE DISCLOSURE STATEMENTS
The Chamber of Commerce of the United States of America (the “Chamber”)
states that it is a non-profit, tax-exempt organization incorporated in the District of
Columbia. The Chamber has no parent corporation, and no publicly held company
has 10% or greater ownership in the Chamber.
The National Federation of Independent Business (“NFIB”) states that it is a
non-profit, tax-exempt organization. The NFIB has no parent corporation, and no
publicly held company has 10% or greater ownership in the NFIB.
The Alaska Chamber of Commerce states that it is a non-profit, tax-exempt
organization. It has no parent corporation, and no publicly held company has 10%
or greater ownership in the Alaska Chamber of Commerce.
The Louisiana Association of Business and Industry states that it is a non-
profit, tax-exempt organization. It has no parent corporation, and no publicly held
company has 10% or greater ownership in the Louisiana Association of Business
and Industry.
The Minnesota Chamber of Commerce states that it is a non-profit, tax-
exempt organization. It has no parent corporation, and no publicly held company
has 10% or greater ownership in the Minnesota Chamber of Commerce.
The State Chamber of Oklahoma states that it is a non-profit, tax-exempt
organization. It has no parent corporation, and no publicly held company has 10%
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or greater ownership in the State Chamber of Oklahoma.
The Tennessee Chamber of Commerce & Industry states that it is a non-profit,
tax-exempt organization. It has no parent corporation, and no publicly held company
has 10% or greater ownership in the Tennessee Chamber of Commerce & Industry.
The Vermont Chamber of Commerce states that it is a non-profit, tax-exempt
organization. It has no parent corporation, and no publicly held company has 10%
or greater ownership in the Vermont Chamber of Commerce.
Wisconsin Manufacturers & Commerce states that it is a non-profit, tax-
exempt organization. It has no parent corporation, and no publicly held company
has 10% or greater ownership in Wisconsin Manufacturers & Commerce.
The Greater Fairbanks Chamber of Commerce (Alaska) states that it is a non-
profit, tax-exempt organization. It has no parent corporation, and no publicly held
company has 10% or greater ownership in the Chamber.
The East Valley Chambers of Commerce Alliance (Arizona) represents seven
chambers in Arizona: the Carefree Cave Creek Chamber of Commerce, the Gilbert
Chamber of Commerce, the Mesa Chamber of Commerce, the Queen Creek
Chamber of Commerce, the Scottsdale Chamber of Commerce, the Superstition
Region Chamber of Commerce, and the Tempe Chamber of Commerce. The East
Valley Chambers of Commerce Alliance, and the Chambers therein, are non-profit,
tax-exempt organizations. No publicly held company has 10% or greater ownership
USCA Case #19-5125 Document #1793456 Filed: 06/18/2019 Page 12 of 51
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in the East Valley Chambers of Commerce Alliance or the Chambers therein.
The Tucson Metro Chamber (Arizona) states that it is a non-profit, tax-exempt
organization. It has no parent corporation, and no publicly held company has 10%
or greater ownership in the Tucson Metro Chamber.
The Greater Miami Chamber of Commerce (Florida) states that it is a non-
profit, tax-exempt organization. It has no parent corporation, and no publicly held
company has 10% or greater ownership in the Greater Miami Chamber of
Commerce.
The Bolingbrook Area Chamber of Commerce (Illinois) states that it is a non-
profit, tax-exempt organization. It has no parent corporation, and no publicly held
company has 10% or greater ownership in the Chamber.
The Carol Stream Chamber of Commerce (Illinois) states that it is a non-
profit, tax-exempt organization with no parent corporation, and that no publicly held
company has a 10% or greater ownership in the Chamber.
Chamber630 (Illinois) states that it is a non-profit, tax-exempt organization.
It has no parent corporation, and no publicly held company has 10% or greater
ownership in the Chamber.
The Elgin Area Chamber of Commerce (Illinois) states that it is a non-profit,
tax-exempt organization with no parent corporation, and that no publicly held
company has a 10% or greater ownership in the Chamber.
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The Elmhurst Chamber of Commerce & Industry (Illinois) states that it is a
non-profit, tax-exempt organization. It has no parent corporation, and no publicly
held company has 10% or greater ownership in the Chamber.
The Heritage Corridor Business Alliance (Illinois) states that it is a non-profit,
tax-exempt organization. It has no parent corporation, and no publicly held company
has 10% or greater ownership in the Heritage Corridor Business Alliance.
The Orland Chamber of Commerce (Illinois) states that it is a non-profit, tax-
exempt organization. It has no parent corporation, and no publicly held company
has 10% or greater ownership in the Chamber.
The St. Charles Chamber of Commerce (Illinois) states that it is a non-profit,
tax-exempt organization with no parent corporation, and that no publicly held
company has a 10% or greater ownership in the Chamber.
The West Suburban Chamber of Commerce and Industry (Illinois) states that
it is a non-profit, tax-exempt organization. It has no parent corporation, and no
publicly held company has 10% or greater ownership in the Chamber.
The Wheaton Chamber of Commerce (Illinois) states that it is a non-profit,
tax-exempt organization. It has no parent corporation, and no publicly held company
has 10% or greater ownership in the Chamber.
The Traverse City Area Chamber of Commerce (Michigan) states that it is a
non-profit, tax-exempt organization. It has no parent corporation, and no publicly
USCA Case #19-5125 Document #1793456 Filed: 06/18/2019 Page 14 of 51
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held company has 10% or greater ownership in the Chamber.
The Northwest Chamber of Commerce (Missouri) states that it is a non-profit,
tax-exempt organization. It has no parent corporation, and no publicly held company
has 10% or greater ownership in the Chamber.
The Boulder City Chamber of Commerce (Nevada) states that it is a non-
profit, tax-exempt organization. It has no parent corporation, and no publicly held
company has 10% or greater ownership in the Chamber.
The Henderson Chamber of Commerce (Nevada) is a non-profit, tax-exempt
organization incorporated in Henderson, Nevada. The Henderson Chamber of
Commerce has no parent corporation and no publicly held company has 10% or
greater ownership in the Chamber.
The Las Vegas Asian Chamber of Commerce (Nevada) states that it is a non-
profit, tax-exempt organization. It has no parent corporation, and no publicly held
company has 10% or greater ownership in the Las Vegas Asian Chamber of
Commerce.
The Las Vegas Latin Chamber of Commerce (Nevada) states that it is a non-
profit, tax-exempt organization. It has no parent corporation, and no publicly held
company has 10% or greater ownership in the Las Vegas Latin Chamber of
Commerce.
The Las Vegas Metro Chamber of Commerce (Nevada) states that it is a non-
USCA Case #19-5125 Document #1793456 Filed: 06/18/2019 Page 15 of 51
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profit, tax-exempt organization. It has no parent corporation, and no publicly held
company has 10% or greater ownership in the Las Vegas Metro Chamber of
Commerce.
The Reno + Sparks Chamber of Commerce (Nevada) states that it is a non-
profit, tax-exempt organization. It has no parent corporation, and no publicly held
company has 10% or greater ownership in the Reno + Sparks Chamber of
Commerce.
The Urban Chamber of Commerce (Nevada) states that it is a non-profit, tax-
exempt organization. It has no parent corporation, and no publicly held company
has 10% or greater ownership in the Urban Chamber of Commerce.
The Zebulan Chamber of Commerce (North Carolina) states that it is a non-
profit, tax-exempt organization. It has no parent corporation, and no publicly held
company has 10% or greater ownership in the Zebulan Chamber of Commerce.
The Chester County Chamber of Business and Industry (Pennsylvania) states
that it is a non-profit, tax-exempt organization. It has no parent corporation, and no
publicly held company has 10% or greater ownership in the Chamber.
The Greater Lexington Chamber of Commerce and Visitor Center (South
Carolina) states that it is a non-profit, tax-exempt organization. It has no parent
corporation, and no publicly held company has 10% or greater ownership in the
Greater Lexington Chamber.
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The Allen Fairview Chamber of Commerce (Texas) states that it is a non-
profit, tax-exempt organization. It has no parent corporation, and no publicly held
company has 10% or greater ownership in the Chamber.
The Cedar Hill Chamber of Commerce (Texas) states that it is a non-profit,
tax-exempt organization. It has no parent corporation, and no publicly held company
has 10% or greater ownership in the Chamber.
The Colleyville Chamber of Commerce (Texas) states that it is a non-profit,
tax-exempt organization. It has no parent corporation, and no publicly held company
has 10% or greater ownership in the Chamber.
The Chamber (Schertz-Cibolo-Selma Area) (Texas) states that it is a non-
profit, tax-exempt organization. It has no parent corporation, and no publicly held
company has 10% or greater ownership in the Chamber.
The Denison Area Chamber of Commerce (Texas) states that it is a non-profit,
tax-exempt organization. It has no parent corporation, and no publicly held company
has 10% or greater ownership in the Chamber.
The East Parker County Chamber of Commerce (Texas) states that it is a non-
profit, tax-exempt organization. It has no parent corporation, and no publicly held
company has 10% or greater ownership in the Chamber.
The Frisco Chamber of Commerce (Texas) states that it is a non-profit, tax-
exempt organization with no parent corporation, and that no publicly held company
USCA Case #19-5125 Document #1793456 Filed: 06/18/2019 Page 17 of 51
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has a 10% or greater ownership in the Chamber.
The Garland Chamber of Commerce (Texas) states that it is a non-profit, tax-
exempt organization. It has no parent corporation, and no publicly held company
has 10% or greater ownership in the Chamber.
The Granbury Chamber of Commerce (Texas) states that it is a non-profit,
tax-exempt organization. It has no parent corporation, and no publicly held company
has 10% or greater ownership in the Chamber.
The Grand Prairie Chamber of Commerce (Texas) states that it is a non-profit,
tax-exempt organization. It has no parent corporation, and no publicly held company
has 10% or greater ownership in the Chamber.
The Grapevine Chamber of Commerce (Texas) states that it is a non-profit,
tax-exempt organization. It has no parent corporation, and no publicly held company
has 10% or greater ownership in the Grapevine Chamber of Commerce.
The Greater Arlington Chamber of Commerce (Texas) states that it is a non-
profit, tax-exempt organization. It has no parent corporation, and no publicly held
company has 10% or greater ownership in the Greater Arlington Chamber of
Commerce.
The Greater Waco Chamber of Commerce (Texas) states that it is a non-profit,
tax-exempt organization. It has no parent corporation, and no publicly held company
has 10% or greater ownership in the Greater Waco Chamber of Commerce.
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The Hurst Euless Bedford Chamber of Commerce (Texas) states that it is a
non-profit, tax-exempt organization. It has no parent corporation, and no publicly
held company has 10% or greater ownership in the Chamber.
The Lake Cities Chamber of Commerce (Texas) states that it is a non-profit,
tax-exempt organization with no parent corporation, and that no publicly held
company has a 10% or greater ownership in the Chamber.
The Lewisville Area Chamber of Commerce (Texas) states that it is a non-
profit, tax-exempt organization with no parent corporation, and that no publicly held
company has a 10% or greater ownership in the Chamber.
The Longview Chamber of Commerce (Texas) states that it is a non-profit,
tax-exempt organization with no parent corporation, and that no publicly held
company has a 10% or greater ownership in the Chamber.
The Lubbock Chamber of Commerce (Texas) states that it is a non-profit, tax-
exempt organization with no parent corporation, and that no publicly held company
has a 10% or greater ownership in the Chamber.
The Mansfield Area Chamber of Commerce (Texas) states that it is a non-
profit, tax-exempt organization with no parent corporation, and that no publicly held
company has a 10% or greater ownership in the Chamber.
The Melissa Area Chamber of Commerce (Texas) states that it is a non-profit,
tax-exempt organization with no parent corporation, and that no publicly held
USCA Case #19-5125 Document #1793456 Filed: 06/18/2019 Page 19 of 51
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company has a 10% or greater ownership in the Chamber.
The Mesquite Chamber of Commerce (Texas) states that it is a non-profit, tax-
exempt organization with no parent corporation, and that no publicly held company
has a 10% or greater ownership in the Chamber.
The North Texas Gay Lesbian Bisexual Transgender Chamber of Commerce
(Texas) states that it is a non-profit, tax-exempt organization. It has no parent
corporation, and no publicly held company has 10% or greater ownership in the
Chamber.
The Plano Chamber of Commerce (Texas) states that it is a non-profit, tax-
exempt organization with no parent corporation, and that no publicly held company
has a 10% or greater ownership in the Chamber.
The Pottsboro Area Chamber of Commerce (Texas) states that it is a non-
profit, tax-exempt organization with no parent corporation, and that no publicly held
company has a 10% or greater ownership in the Chamber.
The Rockwall Area Chamber of Commerce (Texas) states that it is a non-
profit, tax-exempt organization with no parent corporation, and that no publicly held
company has a 10% or greater ownership in the Chamber.
The Rowlett Chamber of Commerce (Texas) states that it is a non-profit, tax-
exempt organization with no parent corporation, and that no publicly held company
has a 10% or greater ownership in the Chamber.
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The San Antonio Chamber of Commerce (Texas) states that it is a non-profit,
tax-exempt organization with no parent corporation, and that no publicly held
company has a 10% or greater ownership in the Chamber.
The Wichita Falls Chamber of Commerce (Texas) states that it is a non-profit,
tax-exempt organization with no parent corporation, and that no publicly held
company has a 10% or greater ownership in the Chamber.
The Wylie Chamber of Commerce (Texas) states that it is a non-profit, tax-
exempt organization with no parent corporation, and that no publicly held company
has a 10% or greater ownership in the Chamber.
The Marshfield Area Chamber of Commerce & Industry (Wisconsin) states
that it is a non-profit, tax-exempt organization with no parent corporation, and that
no publicly held company has a 10% or greater ownership in the Chamber.
The Texas Association of Business states that it is a non-profit, tax-exempt
organization. It has no parent corporation, and no publicly held company has a 10%
or greater ownership in the Texas Association of Business.
The United Service Association for Health Care is a non-profit corporation
chartered in Washington, D.C. It has no parent corporation, and no publicly held
company has a 10% or greater ownership in the United Service Association for
Health Care.
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STATEMENT REGARDING
CONSENT TO FILE AND SEPARATE BRIEFING
All parties have consented to the filing of this brief. Amici curiae filed their
notice of intent to participate as amici curiae on June 5, 2019.
Pursuant to Circuit Rule 29(d), counsel for amici curiae hereby certify that it
is not practicable to file a joint amicus curiae brief with other potential amici in
support of Appellant and that it is therefore necessary to file a separate brief.
Counsel for these amici reached out to other trade associations that may have
been interested in participating as amici in this case, in hopes that all non-
governmental amici could file a single brief. This effort resulted in the present
coalition, which reduced the number of potential amicus curiae filings.
The State and Local Chambers have a unique perspective, as many of them
have offered, or planned to offer, geographically-based, multi-industry association
health plans under the Final Rule. Amici have endeavored to reduce the overlap
between this brief and other briefs that may be filed by other amici with different
perspectives.
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IDENTITY AND INTEREST OF AMICI CURIAE2
Amici curiae are the Chamber of Commerce of the United States of America
(the “Chamber”), 63 State and Local Chambers of Commerce, the National
Federation of Independent Business (“NFIB”), the Texas Association of Business,
and the United Service Association for Health Care. They represent many of the
nation’s small businesses and working owners who will benefit from Final Rule at
issue here.
The Chamber is the world’s largest business federation. It represents 300,000
direct members and indirectly represents the interests of more than 3 million
companies and professional organizations of every size, in every industry sector, and
from every region of the country. More than 96 percent of the Chamber’s members
are small businesses with 100 or fewer employees, 70 percent of which have 10 or
fewer employees. A primary function of the Chamber is to represent the interests of
its members in matters before Congress, the Executive Branch, and the courts. To
that end, the Chamber regularly files amicus curiae briefs in cases that raise issues
of concern to the nation’s business community.
The NFIB, based in Nashville, Tennessee, is the nation’s leading small
2 Pursuant to Federal Rule of Appellate Procedure 29(a), amici curiae state that the
parties have consented to the filing of this brief. No counsel for any party authored
this brief in whole or in part, and no entity or person, aside from amici curiae, their
members, and their counsel, made any monetary contribution intended to fund the
preparation or submission of this brief.
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business association, representing members in Washington, D.C. and all 50 state
capitals. Founded in 1943 as a non-profit, non-partisan organization, NFIB’s
mission is to promote and protect the rights of its members to own, operate, and
grow their businesses. To protect its members’ interests, NFIB frequently files
amicus curiae briefs in cases that threaten to harm small businesses.
A number of State and Local Chambers of Commerce also join this brief as
amici curiae. Those “State and Local Chambers” include: the Alaska Chamber of
Commerce, the Louisiana Association of Business and Industry, the Minnesota
Chamber of Commerce, the State Chamber of Oklahoma, the Vermont of Chamber
of Commerce, the Tennessee Chamber of Commerce & Industry, Wisconsin
Manufacturers & Commerce, the Greater Fairbanks Chamber of Commerce
(Alaska), the East Valley Chambers of Commerce Alliance (Arizona),3 the Tucson
Metro Chamber (Arizona), the Greater Miami Chamber of Commerce (Florida), the
Bolingbrook Area Chamber of Commerce (Illinois), the Carol Stream Chamber of
Commerce (Illinois), Chamber630 (Illinois), the Elgin Area Chamber of Commerce
(Illinois), the Elmhurst Chamber of Commerce & Industry (Illinois), the Heritage
Corridor Business Alliance (Illinois), the Orland Chamber of Commerce (Illinois),
3 The East Valley Chambers of Commerce Alliance represents seven chambers in
Arizona: the Carefree Cave Creek Chamber of Commerce, the Gilbert Chamber of
Commerce, the Mesa Chamber of Commerce, the Queen Creek Chamber of
Commerce, the Scottsdale Chamber of Commerce, the Superstition Region Chamber
of Commerce, and the Tempe Chamber of Commerce.
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the St. Charles Chamber of Commerce (Illinois), the West Suburban Chamber of
Commerce and Industry (Illinois), the Wheaton Chamber of Commerce (Illinois),
the Traverse City Area Chamber of Commerce (Michigan), the Northwest Chamber
of Commerce (Missouri), the Boulder City Chamber of Commerce (Nevada), the
Henderson Chamber of Commerce (Nevada), the Las Vegas Asian Chamber of
Commerce (Nevada), the Las Vegas Latin Chamber of Commerce (Nevada), the Las
Vegas Metro Chamber of Commerce (Nevada), the Reno + Sparks Chamber of
Commerce (Nevada), the Urban Chamber of Commerce (Nevada), the Zebulan
Chamber of Commerce (North Carolina), the Chester County Chamber of Business
and Industry (Pennsylvania), the Greater Lexington Chamber of Commerce and
Visitor Center (South Carolina), the Allen Fairview Chamber of Commerce (Texas),
the Cedar Hill Chamber of Commerce (Texas), the Chamber (Schertz-Cibolo-Selma
Area) (Texas), the Colleyville Chamber of Commerce (Texas), the Denison Area
Chamber of Commerce (Texas), the East Parker County Chamber of Commerce
(Texas), the Frisco Chamber of Commerce (Texas), the Garland Chamber of
Commerce (Texas), the Granbury Chamber of Commerce (Texas), the Grand Prairie
Chamber of Commerce (Texas), the Grapevine Chamber of Commerce (Texas), the
Greater Arlington Chamber of Commerce (Texas), the Greater Waco Chamber of
Commerce (Texas), the Hurst Euless Bedford Chamber of Commerce (Texas), the
Lake Cities Chamber of Commerce (Texas), the Lewisville Area Chamber of
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Commerce (Texas), the Longview Chamber of Commerce (Texas), the Lubbock
Chamber of Commerce (Texas), the Melissa Area Chamber of Commerce (Texas),
the Mansfield Area Chamber of Commerce (Texas), the Mesquite Chamber of
Commerce (Texas), the North Texas Gay Lesbian Bisexual Transgender Chamber
of Commerce (Texas), the Plano Chamber of Commerce (Texas), the Pottsboro Area
Chamber of Commerce (Texas), the San Antonio Chamber of Commerce (Texas),
the Rockwall Area Chamber of Commerce (Texas), the Rowlett Chamber of
Commerce (Texas), the Wichita Falls Chamber of Commerce (Texas), the Wylie
Chamber of Commerce (Texas), and the Marshfield Area Chamber of Commerce &
Industry (Wisconsin). These State and Local Chambers represent small employers
in their communities. Following the Labor Department’s adoption of the Final Rule,
many of these State and Local Chambers formed association health plans that offered
quality, affordable health coverage options that were otherwise unavailable to their
members. Other Chambers were preparing to do so, and had invested considerable
time and resources into their efforts, before the District Court’s ruling put those plans
on hold.
The Texas Association of Business is the leading employer organization in
Texas and serves as the state’s chamber of commerce. It represents small businesses
in nearly every community in Texas. It works to improve the Texas business climate
and to help make the state’s economy the strongest in the world. For more than 95
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years, the Texas Association of Business has fought for issues that impact small
businesses to ensure that their opinions are heard. After investing considerable time
and resources, the Texas Association of Business was in the final stages of forming
an association health plan when the District Court’s ruling put the Texas Association
of Business’s formation plans on hold.
The United Service Association for Health Care is a non-profit corporation
chartered in Washington, D.C. It was formed to promote the adoption of equitable
health care policy in the United States. To do so, the United Service Association for
Health Care engages in nonpartisan research for the benefit of the general public
regarding the health care system of the United States. The organization is committed
to the promotion of equal access to health care for all Americans. It is intimately
familiar with the challenges small employers face when attempting to secure quality,
affordable health care. Therefore, the United Service Association for Health Care
supports the Final Rule’s measured approach to providing better opportunities for
Americans to access quality, affordable health coverage.
This case raises an issue of significant importance to amici’s members and to
all of America’s working owners and small businesses—the availability of real
opportunities for working owners and small employers to access quality, affordable
health insurance coverage. Amici are intimately familiar with the problems that
working owners and small businesses encounter when attempting to secure such
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coverage. The State and Local Chambers are especially well-situated to address the
practical consequences of the District Court’s decision because of their experience
in forming association health plans and providing high-quality, affordable coverage
that was not otherwise available to their members.
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INTRODUCTION AND SUMMARY OF ARGUMENT
Small businesses and working owners face unique challenges in securing
quality, affordable health insurance. That has been true for decades, and while the
Patient Protection and Affordable Care Act (“ACA”) attempted to improve the
situation, it has only gotten worse. In recent years, small businesses and working
owners have seen their health insurance premiums sky-rocket, making it more and
more difficult to secure quality coverage. These difficulties have affected both the
businesses’ owners—who face greater costs and more difficulty in attracting
talent—and their employees, who are either not receiving employer-sponsored
health care or are paying higher premiums for lower quality plans. The Labor
Department’s Final Rule tackles this problem through a lawful and commonsense
solution that has already proven highly successful. Indeed, before the District
Court’s ruling, a number of State and Local Chambers had created association health
plans, with great success, and many more were on the verge of doing so. This real-
world experience confirmed that plans formed under the Final Rule were already
significantly lowering premiums and vastly improving coverage options. For
businesses covered by those plans and their hard-working employees, the Final
Rule’s value was real, and the impact of the District Court’s ruling was devastating.
The Labor Department’s Final Rule offered hope to many small businesses
and working owners that had been unable to purchase affordable, comprehensive
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coverage. By banding together to purchase coverage through association health
plans, small businesses and working owners can finally offer a variety of quality
options at more affordable prices. That is a logical, market-driven solution to the
problems faced by small employers.
Amici’s first-hand experience proves the point. In the brief period while the
Final Rule was in force, more than 21,000 individuals enrolled in association health
plans formed by State and Local Chambers. See U.S. Chamber of Commerce,
“Successful Association Health Plans” (last visited June 7, 2019),
https://uscham.com/2XAXlj4. More than 300,000 other Americans were expected
to enroll in the plans offered by those Chambers, as well as association health plans
that other State and Local Chambers were deep in the process of creating. Id. These
statistics confirm that the Final Rule was functioning precisely as the Labor
Department predicted: The association health plans formed by those State and Local
Chambers offered a variety of health coverage options for their members to utilize,
with premium savings up to 30%. Id. And the quality of those plans matched the
coverage that many Americans receive through the plans that larger employers offer
to employees. The District Court’s invalidation of the Final Rule thus deprives
working Americans of continuous, stable, and affordable health coverage through
association health plans.
Nothing in the Employee Retirement Income Security Act (“ERISA”)
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prohibited the Labor Department from authorizing small businesses and working
owners to pool their resources and market power to provide better health coverage
to their employees. Certainly, the Department’s prior sub-regulatory guidance does
not prevent it from expanding on its previous approach through this notice-and-
comment rulemaking. Nor does the Final Rule permit association health plans to
evade the ACA, as Appellees incorrectly suggested below. Rather, these plans are
subject to the ACA, including its core consumer protections, which apply to all
plans. Because of those market-wide protections, association health plans cannot
deny coverage to individuals with pre-existing conditions, charge higher premiums
because of a pre-existing condition, rescind coverage, refuse to provide coverage of
preventive health services, or ignore any of the ACA’s other critical protections.
In short, the Department’s authorization of association health plans is a
lawful and highly-effective solution that will improve the lives of working owners
and the millions of Americans employed by small businesses. This Court should
accordingly reverse the District Court’s decision and uphold the Rule.
ARGUMENT
II. The Final Rule Aims to Solve Problems Working Owners and Small
Businesses Have Long Experienced When Attempting to Secure
Affordable Coverage.
Small employers and working owners have long experienced significant
problems when attempting to secure affordable, quality health coverage. In the years
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before the ACA, various efforts to make health coverage more affordable caused
severe malfunctions in the individual and small-group markets, including
skyrocketing premiums and insurers leaving the markets. See, e.g., King v. Burwell,
135 S. Ct. 2480, 2485-2487 (2015). Insurers weeded out small groups with
potentially costly members by imposing volatile rate increases, implementing
lengthy exclusions for pre-existing conditions, applying broad coverage exclusions,
and engaging in post-claims underwriting. See John G. Day, The Patient Protection
and Affordable Care Act: What Does It Really Do?, 22 Conn. Ins. L.J. 121, 134-35
(2016). The ACA sought to change the way individual and small-group health
insurance is pooled, priced, structured, and delivered. Id. And it did so by imposing
different regulatory burdens on coverage offered in the individual and small-group
markets because those markets had specific failings that were not present in the
large-group market.
Like any statute, not all of the ACA’s reforms had their intended effect. After
the ACA, employees working for large employers continued to retain relatively
stable and comprehensive coverage. However, working owners and employees of
small businesses did not fare as well as expected. Many faced disruptions in
coverage due to canceled health insurance plans, “either because the plans did not
comply with the new ACA requirements or because insurers chose not to continue
offering the plans.” Jennifer Tolbert, Henry J. Kaiser Family Foundation, “The
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Coverage Provisions in the Affordable Care Act: An Update” (Mar. 2, 2015),
https://bit.ly/2Pbs3yR. Many small business owners have explained that increasing
costs are the primary reason that they cannot offer health coverage to employees and
their families. 83 Fed. Reg. at 28,914-15. And working owners face the same
difficulties when searching for affordable, quality coverage on the individual market.
Consequently, while employees of larger companies typically receive quality
ACA-compliant coverage through their employers, millions of Americans employed
by small companies have struggled to access quality, affordable coverage through
their employment. For instance, from 2012 to 2017, “the percentage of businesses
with under 50 workers offering coverage [fell] from 59 percent to 50 percent. In
2001, two thirds of those employers offered benefits.” Reed Abelson, N.Y. Times,
While Premiums Soar under Obamacare, Cost of Employer-Based Plans Are Stable
(Sept. 19, 2017), https://nyti.ms/2fyyo3O. “For employers with fewer than 10
employees, those offering health benefits declined from 35.6 percent in 2008 to 22.7
percent in 2015 (a 36 percent decrease).” Paul Fronstin, Employee Benefit Research
Institute, Fewer Small Employers Offering Health Coverage: Large Employers
Holding Steady (July 2016), https://bit.ly/2KhiCub. Overall, as the Final Rule
explains, the percentage of small businesses offering health coverage for employees
“has declined substantially from 47 percent of establishments in 2000 to 29 percent
in 2016.” 83 Fed. Reg. at 28,947 n.113. Although the exact numbers vary from
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study to study, based on the time period and size of employers evaluated, the studies
consistently show a marked decline in health insurance offerings by small
businesses.
Many of amici’s members and their employees have experienced these very
hardships. These small employers incur much greater per capita administrative costs
than their large employer counterparts. See, e.g., Amy B. Monahan & Daniel
Schwarcz, Saving Small-Employer Health Insurance, 98 Iowa L. Rev. 1935, 1942-
43 (July 2013). They often do not have the in-house expertise necessary to navigate
the complex process of choosing a quality health plan, and, by one estimate,
“administrative expenses account for 25-27% of premiums in small-group markets,
but only 5-10% in large-group markets.” Id. at 1942. Even more troublesome, the
poor health of “just one or two employees can disproportionately affect the cost and
availability of small-employer coverage.” Id. at 1943. Since small establishments
often purchase their coverage on an annual basis, the poor health of one employee
can result in drastic premium increases. Id. at 1942-43.
Consequently, rates have risen significantly for businesses in the small-group
market. A sample of testimonials from amici’s members—now enrolled in Chamber
association health plans—illustrates these difficulties: One member noted that she
and her husband, who own a painting business, saw the annual cost of their health
insurance premiums rise more than $10,000 in a single year. See “Successful
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Association Health Plans,” supra at 2. The natural result of such rapidly rising
premiums is many small businesses, including non-profits, have been forced to drop
their group coverage. See id. (noting that a non-profit animal shelter with six
employees was forced to drop group coverage in 2014 due to ever-increasing costs).
Others had never been able to offer health insurance coverage as an employee benefit
because of the high cost. But the Department’s Final Rule opened a pathway for
them to access affordable, quality coverage on par with the plans offered in the large
group market.
III. The Final Rule Provides a Common Sense, Highly Effective Solution that
Improves Competition While Benefiting Millions of Small-Business
Employees and Working Owners.
A. The Final Rule Provides a Common Sense Solution to the Problems
Faced by Small Businesses and Working Owners.
Before the District Court’s ruling, many of the State and Local Chamber amici
were offering—or in the process of offering—association health plans authorized by
the Final Rule. Their real-world experience shows that the Department’s Rule
worked as intended, and allowed more people to access and receive affordable,
higher-quality health coverage. The Final Rule authorizes association health plans
sponsored by geographically-based, multi-industry organizations, which can then
garner large numbers of covered lives to achieve economies of scale. 83 Fed. Reg.
at 28,939. Through that pathway, many State and Local Chambers had formed
association health plans and begun offering higher-quality and more competitive
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health coverage plans to their members. 4 In other instances, State and Local
Chambers were in the process of forming associations and creating similar plans for
their member companies when the District Court’s decision halted the Final Rule’s
implementation.5
4 Examples of locally-based, multi-industry plans include those provided by the
Vermont Chamber of Commerce, the State Chamber of Oklahoma, Wisconsin
Manufacturers & Commerce, the Southern Arizona Chamber of Commerce
Association (Arizona), Tucson Metro Chamber (Arizona), One Southern Indiana
Chamber of Commerce (Indiana), the Allendale Area Chamber of Commerce
(Michigan), the Alger County Chamber of Commerce (Michigan), the Alpena Area
Chamber of Commerce (Michigan), the Benzie County Chamber of Commerce
(Michigan), the Cadillac Area Chamber of Commerce (Michigan), the Cornerstone
Chamber of Commerce (Michigan), the Detroit Regional Chamber (Michigan), the
Gaylord Area Chamber of Commerce (Michigan), the Greater Albion Chamber of
Commerce (Michigan), the Greater Brighton Area Chamber of Commerce
(Michigan), the Huron Valley Chamber of Commerce (Michigan), the Leelanau
Peninsula Chamber of Commerce (Michigan), the Muskegon Lakeshore Chamber
of Commerce (Michigan), the Reese Chamber of Commerce (Michigan), the
Rockford Chamber of Commerce (Michigan), the Tawas Area Chamber of
Commerce (Michigan), the Traverse City Area Chamber of Commerce (Michigan),
the Boulder City Chamber of Commerce (Nevada), the Henderson Chamber of
Commerce (Nevada), the Las Vegas Metro Chamber (Nevada), the Latin Chamber
of Commerce (Nevada), the Reno + Sparks Chamber of Commerce (Nevada), the
Allen Fairview Chamber of Commerce (Texas), the Celina Chamber of Commerce
(Texas), the Farmersville Chamber of Commerce (Texas), the Frisco Chamber of
Commerce (Texas), the Grapevine Chamber of Commerce (Texas), the Longview
Chamber of Commerce (Texas), the Lubbock Chamber of Commerce (Texas), the
Melissa Chamber of Commerce (Texas), the McKinney Chamber of Commerce
(Texas), the Plano Chamber of Commerce (Texas), the Princeton Chamber of
Commerce (Texas), the San Antonio Chamber of Commerce (Texas), the Wylie
Chamber of Commerce (Texas), and the Economic Alliance of Snohomish County
(Washington). See U.S. Chamber of Commerce, “Successful Association Health
Plans” (last visited June 7, 2019), https://uscham.com/2XAXlj4.
5 Examples of locally-based, multi-industry plans that were in the process of being
formed include those proposed by the Alaska Chamber of Commerce, the Illinois
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Take the experiences of constituents enrolled in the Vermont Chamber of
Commerce’s association health plan as just one example of how these plans were
already benefitting individuals. See “Successful Association Health Plans,” supra
at 2. The Vermont Chamber of Commerce’s association health plan covers over 200
employers and their employees. Its plan designs offer, at a minimum, all “essential
health benefits” under the ACA and additional state-mandated benefits. Id. And its
members greatly benefitted from enrolling in the plan: One restaurant with six
employees moved from a high-deductible plan on the Vermont Individual Market
Exchange to the association health plan. It now pays just $3 more in premiums per
policy, but reduced its employees’ annual deductibles by $3,650 each. Id. A solar
panel installation company reported similar results: the employer pays 100% of the
premium and has saved $14,500 this year by switching from a plan found on the
Exchange to the association health plan. Id. Its employees realize savings each time
Chamber of Commerce, the Minnesota Chamber of Commerce, the Louisiana
Association of Business & Industry, the Texas Association of Business, the Greater
Fairbanks Chamber of Commerce (Alaska), the East Valley Chambers of Commerce
Alliance (Arizona), the Northern Arizona Chamber of Commerce (Arizona), the
Greater Miami Chamber of Commerce (Florida), the Greater Naples Chamber of
Commerce (Florida), the Wayne County Area Chamber of Commerce (Indiana), the
Greater Bethesda Chamber of Commerce (Maryland), the Washington County
Chamber of Commerce (Maryland), the Carson City Chamber of Commerce
(Nevada), the Schuylkill Chamber of Commerce (Pennsylvania), the Bulverde
Spring Branch Chamber of Commerce (Texas), the Chamber Schertz-Cibolo-Selma
Area (Texas), the Greater Waco Chamber (Texas), the Salt Lake Chamber (Utah),
the Marshfield Area Chamber of Commerce (Wisconsin), and the National
Association of Independent Automobile Dealers Association.
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they visit the doctor: they save $35 on each urgent care visit and $25 on each
specialty visit. A non-profit animal shelter was forced to drop coverage for its
employees in 2014 due to ever-increasing costs. Now, it can offer employees health
insurance again through the association health plan’s more affordable options. Id.
A pediatric physician with five employees who enrolled in the plan saves over
$4,000 in annual premium expenses, while offering his employees a nearly identical
plan design, with two additional benefits: (1) the plans are stacked so employees
have less out-of-pocket exposure and (2) prescriptions are now subject to a small
copay instead of the previous $2,850 deductible employees were provided. Id. Last,
a self-employed couple enrolled in the plan saves over $82 per month in premium
costs, which they used to purchase dental and vision insurance through the Vermont
Chamber’s association health plan. Id. This one set of examples is a glimpse into
the real benefits that the Final Rule is offering for real people who enrolled before
the District Court invalidated the Rule. Under the District Court’s ruling, all of those
people will lose health coverage through the association health plan; if this Court
reverses that ruling, many more people will be able to enroll in these new and
affordable comprehensive coverage options.
Other State and Local Chambers’ experiences similarly provide first-hand
evidence that small employers were able to access better, more affordable options
using association health plans authorized under the Final Rule. For example, the
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Clark County Health Plan Association in Nevada, led by the Henderson Chamber of
Commerce, covers more than 10,000 people. Since September 2018, it has offered
a range of health plans for working owners and small businesses that save members
up to 30% on annual premiums, with no rate increases until summer or fall of 2020.
Id. The Reno + Sparks Chamber of Commerce, also in Nevada, formed an
association health plan with premium savings of up to 30%. Id. Additionally, the
North Texas Employer Health Plan Cooperative, joined by 36 local chambers,6
covers thousands of individuals and offers a wide variety of plan designs. Id. The
Lubbock Chamber of Commerce created an association health plan that offered
several plan designs and resulted in savings of up to 30% on premium rates. Id. And
6 Those chambers include: the Greater Arlington Chamber of Commerce, the
Bridgeport Chamber of Commerce, the Cedar Hill Chamber of Commerce, the
Colleyville Chamber of Commerce, the Coppell Chamber of Commerce, the
Corsciana & Navarro County Chamber of Commerce, the Decatur Chamber of
Commerce, the Denison Area Chamber of Commerce, the Denton Chamber of
Commerce, the DeSoto Chamber of Commerce, the East Parker County Chamber of
Commerce, the Ennis Chamber of Commerce, the Farmers Branch Chamber of
Commerce, the Flower Mound Chamber of Commerce, the Fort Worth Chamber of
Commerce, the Garland Chamber of Commerce, the Granbury Chamber of
Commerce, the Grand Prairie Chamber of Commerce, the Hurst Euless Bedford
Chamber of Commerce, the Irving Chamber of Commerce, Jacksboro Chamber of
Commerce, Lake Cities Chamber of Commerce, the Lake Highlands Chamber, the
Lewisville Area Chamber of Commerce, the Mansfield Area Chamber of
Commerce, the Mesquite Chamber of Commerce, the North Texas Gay Lesbian
Bisexual Transgender Chamber of Commerce, Northwest Metroport Chamber of
Commerce, Pottsboro Area Chamber of Commerce, Rockwall Chamber of
Commerce, Rowlett Chamber of Commerce, the Weatherford Chamber of
Commerce, the Wichita Falls Chamber of Commerce, the Balch Springs Chamber
of Commerce, and the Sanger Chamber of Commerce.
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the San Antonio Chamber of Commerce was able to establish an association health
plan that allowed its members to realize savings of approximately 21% from their
original premium rates. Id.
The Final Rule thereby promoted economies of scale and administrative
efficiency for small businesses—just as it was predicted to do. See Chamber of
Commerce of the United States of America Comment Letter (Mar. 6, 2018),
https://bit.ly/2JKuxhM; see also National Federation of Independent Business
Comment Letter (Jan. 23, 2018), https://bit.ly/2D50rEw. As expected, association
health plans operating under the Final Rule amassed large shares in local health care
markets and exercised greater bargaining power to achieve economies of scale in
purchasing higher quality, more affordable health coverage options. See 83 Fed.
Reg. at 28,942-43. For instance, the Las Vegas Metro Chamber has reported that it
was able to negotiate terms, such as a two-year rate lock, to prevent precisely the
sort of premium volatility that made the individual and small-group markets
untenable before the Final Rule. See “Successful Association Health Plans,” supra
at 2.
The Final Rule also allowed small employers to cut through some regulatory
red tape. Participants in an association health plan benefit from “the same, more
flexible rules to which large employer plans are subject, consistent with leveling the
federal regulatory playing field between small and large employers.” 83 Fed. Reg.
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at 28,941. That provides greater flexibility with respect to benefit package design.
See id. For example, Wisconsin Manufacturers & Commerce reports that it provided
several benefit package designs and a wider variety of health coverage options that
were previously unavailable to small employers. See “Successful Association
Health Plans,” supra at 2. Additionally, the State Chamber of Oklahoma established
an association health plan that offers eight health coverage plans, each of which
covered all ten categories of essential health benefits, and several additional benefits
as well. Id. And the Reno + Sparks Chamber of Commerce’s association health
plan provided six different plan design options for employers to offer to their
employees. Id.
At the time of the District Court’s ruling, other State and Local Chambers
were only weeks away from finalizing association health plans for their constituents.
For example, the Minnesota Chamber of Commerce was days away from finalizing
an association health plan that would have offered more than sixteen plan designs
with a variety of benefits typically not available to small businesses. This plan would
have been available to more than 10,000 individuals in its first year alone. Premium
savings would have exceeded 15% for most businesses, and a second-year renewal
rate cap was guaranteed. Similarly, the East Valley Chambers of Commerce
Alliance was less than a month away from finalizing an association health plan that
would have offered a wide variety of benefits to more than 300,000 individuals.
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The Department anticipated that a “substantial number of uninsured people”
who currently cannot obtain affordable health coverage through their small firms
would enroll in association health plans. 83 Fed. Reg. at 28,912. And the
Congressional Budget Office predicted that approximately “400,000 people who
would have been uninsured will enroll in” association health plans. Id.; United
States Congressional Budget Office, “Federal Subsidies for Health Insurance
Coverage for People under Age 65: 2018 to 2028” (May 2018),
https://bit.ly/2IIPtEL. Again, the Chamber’s data from State and Local Chambers
across the country confirms that, if anything, these predictions were conservative:
To date, more than 21,000 individuals have enrolled in association health plans
provided by State and Local Chambers, and if the Final Rule is reinstated, more than
300,000 Americans are expected to enroll in those and similar Chamber association
health plans in the near future. See Thomas J. Donohue, AHPs Are Key to Valuable
Health Coverage (Apr. 29, 2019), https://uscham.com/2K0hU5n. In short, we know
that the Final Rule was working precisely as the Labor Department predicted,
because amici’s members were on the front line of its success, and now suffer the
brunt of the harm that has resulted from the District Court’s ruling.
B. The Final Rule Makes Working Owners and Small Businesses
More Competitive by Enabling Them to Secure Affordable,
Quality Health Coverage.
Moreover, association health plans under the Final Rule promote competition
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at two levels: First, as explained above, by giving groups of small employers
“increased bargaining power [vis-à-vis] hospitals, doctors, and pharmacy benefit
providers, and creating new economies of scale, administrative efficiencies, and a
more efficient allocation of plan responsibilities,” association health plans reduce
the cost of health coverage to participating small employer members. 83 Fed. Reg.
at 28,912. Small employers that enrolled in association health plans in the brief
period when the Final Rule was in force have enjoyed dramatic savings. For
instance, the Las Vegas Metro Chamber of Commerce created a plan that reduced
employees’ and employers’ costs by an average of 49% and 13%, respectively. See
“Successful Association Health Plans,” supra at 2. And to note just one other
example, the West Texas Employer Health Plan allowed small employers to save up
to 30% on premiums. Id. The Final Rule thus successfully tackled one of the
primary challenges facing the small-group and individual markets, by enabling
businesses and working owners to band together to increase their market power and
spread risk in order to secure better health coverage options.
Second, these increased efficiencies and cost reductions allowed smaller
businesses to compete more effectively with larger businesses. Providing quality,
affordable health coverage options enables smaller firms to attract and retain talent.
See Society for Human Resource Management Comment Letter (Mar. 6, 2018),
https://bit.ly/2yUFNnJ. A recent survey conducted by the Employee Benefits
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Research Institute found that workers are largely dissatisfied with the cost of their
health insurance. See Paul Fronstin, Employee Benefit Research Institute, Workers
Rank Health Care as the Most Critical Issue in the United States (Sept. 24, 2018),
https://bit.ly/2Wrk18P. “Just 22 percent are extremely or very satisfied with the cost
of their health insurance plan, and only 21 percent are satisfied with the costs of
health care services not covered by insurance.” Id. Approximately half of those
surveyed “reported having an increase in health care costs in the past year.” Id. And
these rising health care costs impact employees’ general financial wellbeing:
Roughly “24 percent state that they have decreased their contributions to retirement
plans, and 41 percent have decreased their contributions to other savings” due to the
increased costs of health insurance. Id.
It is thus no surprise that a firm’s ability to provide quality health coverage is
among the most important factors Americans consider before taking a new job. “In
2018, 26 percent of workers rank[ed] health care as the most critical issue in the
United States,” and “73 percent of workers report[ed] that health insurance is one of
the top three most important benefits when considering whether to stay in or choose
a new job, whereas only 57 percent report[ed] that a retirement savings plan is in the
top three.” Id. One study concluded that “[g]ood health insurance” ranked as the
“most important benefit” among job applicants. Ashley Stahl, Forbes, “Employers,
Take Note: Here’s What Employees Really Want” (Oct. 16, 2016),
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https://bit.ly/2SHvoE9. By enabling small employers to provide affordable, high
quality health coverage that would otherwise be available only from large
employers, the Final Rule permits small businesses to compete for talent on a more
even playing field.
IV. The Department’s Final Rule Builds on ERISA and the ACA to Offer
More Americans Quality, Affordable Health Coverage.
The Labor Department’s expansion of association health plans is also
consistent with law. ERISA’s statutory text does not clearly define what constitutes
a permissible “association” of employers, but the Labor Department has long
interpreted the statute’s “group or association” provision to permit association health
plans in certain circumstances. The Final Rule made a measured change consistent
with that long-standing interpretation, by offering an additional pathway for bona
fide associations to qualify to create association health plans. 83 Fed. Reg. at 28,915.
The Final Rule was crafted only after taking into consideration and balancing the
interests expressed in a lengthy notice-and-comment process under the
Administrative Procedure Act (“APA”).
Moreover, the District Court’s suggestion that the Final Rule must be
invalidated because it expands on the Department’s previous sub-regulatory
guidance gets things exactly backwards. As an initial matter, agencies properly set
regulatory policy through the sort of notice-and-comment rulemaking that the Labor
Department utilized to adopt the Final Rule here; sub-regulatory guidance issued
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outside the normal APA procedures cannot displace the agency’s authority to later
adopt a different policy. Thus, to the extent they are inconsistent—which, in truth,
they are not—the Final Rule necessarily must prevail over a non-binding guidance
document. And, in all events, the Supreme Court and this Court have squarely held
that agencies may change course on regulatory matters, and may do so without
having to satisfy any heightened showing. See F.C.C. v. Fox Television Stations,
Inc., 556 U.S. 502, 514 (2009); see also Air Transport Ass’n of Am. v. Nat. Mediation
Bd., 663 F.3d 476, 484 (D.C. Cir. 2011). The District Court’s reasoning is flatly
inconsistent with these bedrock principles of administrative law.
Likewise, despite the Final Rule’s express statement that it is aimed at
expanding the availability of quality, affordable health coverage, 83 Fed. Reg. at
28,916, Appellees have repeatedly accused the Department of enacting the Final
Rule “for the express purpose of negating the ACA’s most important consumer
protections.” Pls.’ Moving Br. at 12. Nothing could be further from the truth. As
Appellees grudgingly admitted in their briefing below, see id. at 5 n.6, the ACA’s
core consumer protections apply equally to plans across the individual, small-, and
large-group markets.
Thus, as the Final Rule explains, association health plans cannot “charg[e]
participants and beneficiaries higher premiums because they have a pre-existing
health condition,” nor can they “deny[] coverage of an otherwise covered but pre-
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existing health condition.” 83 Fed. Reg. at 28,941; 42 U.S.C. § 300gg-3.
Association health plans must also provide the remainder of the ACA’s core
consumer protections, see 83 Fed. Reg. at 28,941-42, including those that prohibit
lifetime or annual limits on benefits, see 42 U.S.C. § 300gg-11; prohibit insurers
from rescinding coverage except in cases of fraud or misrepresentation, see 42
U.S.C. § 300gg-12; require the coverage of certain preventive health services
without cost-sharing, see 42 U.S.C. § 300gg-13; and require the extension of
dependent coverage to children up to age 26, see 42 U.S.C. § 300gg-14. Indeed, in
the brief period where small employers and working owners were permitted to join
association health plans under the Final Rule, the health coverage provided under
the newly-formed plans met all essential health benefit requirements—and many
plans went beyond those requirements to provide additional protections pursuant to
state and local laws. See “Successful Association Health Plans,” supra at 2.
Nor is there any valid reason to expect that the Final Rule will destabilize the
small-group health insurance market. The Department has offered reasoned
explanations for why the potential value of association health plans, discussed
above, outweighs the risk of further market disruption. See 83 Fed. Reg. at 28,947-
50. And, as discussed above, the individual and small-group markets are already
unstable, unaffordable, and inaccessible to millions of Americans working for small
businesses—which is precisely why many small employers want the opportunity to
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enroll in these new coverage options. The Department made the rational policy
choice to provide those smaller employers—and their employees—with that
opportunity.
In short, the Final Rule promotes, not undermines, the very objectives the
ACA seeks to achieve. Congress enacted the ACA to “increase the number of
Americans covered by health insurance and decrease the cost of health care.” Nat’l
Fed’n of Indep. Bus. v. Sebelius, 567 U.S. 519, 538 (2012). The Department has
expressly stated, “[t]he principal objective of the final rule is to expand employer
and employee access to more affordable, high-quality coverage” to ensure that more
Americans purchase and maintain health insurance coverage. 83 Fed. Reg. at
28,916. And, before the District Court’s ruling, small employers were using the
association health plans authorized by the Final Rule to do precisely that.
That is why a broad cross-section of employees, employers, and working
owners support the Final Rule’s sensible approach to association health plans.
Because the Final Rule is a lawful, pro-competitive, and highly effective solution to
existing severe market dysfunctions that affect millions of Americans, this Court
should reverse the decision below and uphold the Final Rule.
CONCLUSION
For the foregoing reasons, the trial court’s order granting Appellees’ motion
for summary judgment and vacating the Final Rule should be reversed.
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Dated: June 18, 2019
Daryl Joseffer
Janet Galeria
U.S. CHAMBER LITIGATION
CENTER
1615 H Street, NW
Washington, D.C. 20062
(202) 463-5337
Counsel for Chamber of Commerce of
the United States of America
Respectfully submitted,
Michael H. McGinley
DECHERT LLP
1900 K Street, NW
Washington, D.C. 2006
(202) 261-3300
David H. Stern
DECHERT LLP
US Bank Tower
633 West 5th Street, Suite 4900
Los Angeles, CA 90071
(213) 808-5720
Counsel for Amici Curiae
USCA Case #19-5125 Document #1793456 Filed: 06/18/2019 Page 49 of 51
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CERTIFICATE OF COMPLIANCE
This brief complies with the type-volume limitations of Fed. R. App. P.
29(a)(5), Fed. R. App. P. 32(a)(2), and D.C. Cir. Rule 32(e)(3) because it contains
4,911 words, excluding the parts of the brief exempted by Fed. R. App. P. 32(f).
This brief complies with the type-face requirements and the type-style
requirements of Fed. R. App. P. 32(a)(4)-(6) because it has been prepared in a
proportionally spaced typeface using Microsoft Word in Times New Roman 14-
point font.
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CERTIFICATE OF SERVICE
I hereby certify that, on June 18, 2019, I electronically filed the foregoing
Corrected Brief of the Chamber of Commerce of the United States of America, State
and Local Chambers of Commerce, the National Federation of Independent
Business, the Texas Association of Business, and the United Service Association for
Health Care as Amici Curiae in Support of Appellants with the Clerk of the United
States Court of Appeals for the District of Columbia Circuit by using the electronic
CM/ECF system, and served copies of the foregoing via the Court’s CM/ECF system
on all ECF-registered counsel.
Dated: June 18, 2019
By: /s/ Michael H. McGinley
Michael H. McGinley
DECHERT LLP
1900 K Street, NW
Washington, D.C. 20006
(202) 261-3300
Counsel for Amici Curiae
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